Proposed Amendments to MVAT in State Budged 25-03-2010

The following are some of the changes proposed by Finance Minister in his budget speech delivered on 25th March, 2010. These are only changes which are of importance in daily use. I shall publish detailed amendments shortly.

1. Audit limit under Section MVAT Act, 2002 to be raised to Rs.60 lakhs. Effective date not spelled out in the speech,

2. Dealers filing half-yearly return to pay VAT taxes within 30 days from end of the period instead of 21 days,

3. Penalty for non-issue of sales bill to be made stringent,

4. Proposal to issue TIN of purchaser mandatory on Invoices issued under MVAT Act,

5. Composition scheme for Builders and Developers. Builders and Developers to pay MVAT @ 1% of the agreement price of flat. Not to be entitled to claim input tax credit,

6. Addition to Farsan list: including Sabudana Chivada, Chana-chur and
Khandvi.

7. Relief in Luxury Tax to Small Hoteliers, No Tax on rent upto Rs. 750.

8. Tax exemption on Rice, wheat, pulses, and flours thereof, chillies, turmeric, gur, tamarind, coconut, coriander seeds, fenugreek, parsley (suva), papad, wet dates, Solapuri Chadars and towels extended to 31st March, 2011.

9 Rates of taxes on raisins, currants and tea @5% to continue till 31st March, 2011,

10. Tax concession to Hairpins, Blood Transfusion apparatus,
vehicles operated on battery or solar energy.

11. Solar Lanterns, Camphor, Dhoop, Kath (catechu), H.D.P.E Fabric
Vermi Compost bed, Cotton seed oil cake - Tax free.

The finance minister has also proposed other changes in VAT Rates

In order to effectively control illegal money-lending in the State, Maharashtra Money-Lending (Regulation) Act, 2007 has been drafted and bill is likely to be introduced in the budget session-2010 of State Assembly.

Government proposes to establish two new Government Medical Colleges, one in Raigad District and another in Nandurbar District. All necessary funds will be made available for this.

Increase in MVAT Rates from 4% to 5%

The Maharashtra Government has issued notification No VAT-1510/CR 47/Taxation-1.- dated 10th March, 2010; increase in rates of MVAT from 4% to 5% on sales of all goods which are now taxable at 4%. However rates of taxes of goods declared u/s. 14 of CST Act, 1956 i.e. declared goods,  will continue to be taxed at 4% and there is no change in rate of taxes of these goods.

The increase in rate shall come in force from 1st April, 2010.

Notification Increase in Rate of MVAT from 4% to 5%

The list of declared goods are as under:

List to Declared Goods

Earlier Maharashtra Government had issued Maharashtra Value Added Tax (Amendment) Ordinance, 2010 dated 18th February, 2010 empowering state government to issue notification to increase tax rates as specified in Schedule to MVAT Act.

Income-tax Proposals – Budget 2010

 

Important Changes proposed in Budget 2010 with reference to Income-tax

• Introduction of Direct Tax Code postponed for 1 year

• Rates of Income tax revised by increase in slabs in case of individuals, HUF, AOP/BOI & Artificial Jursidical Person:

• Slab of Income	Rate of Income tax
  Up to Rs. 160,000#	Nil
  Rs. 160,001 to Rs. 500,000	10%
  RS. 500,001 to Rs. 800,000	20%
  Rs. 800,001 & above	30%
  Surcharge irrespective of the total income	Nil

  # In case of individual being woman resident in India and below the age of 65 years at any time during the PY, the basis exemption limit is Rs. 190,000.

  #In case of individual, being resident in India, who is age of 65 years or more at any time during the PY, the basic exemption limit is Rs. 2,40,000.

•   In case of Partnership firms [Including LLP], the rate of tax shall be 30%. Surcharge shall be NIL. 

• In case of companies, the rate of taxes shall be same as specified in the Finance Act 2009. Further, Surcharge has been reduced to 7.5% in case of domestic companies [2.5% in case of non domestic companies continues], if total income of the company exceeds Rs. One crore.

• Education cess and SHEC shall be continued to be levied in all cases.

• Deduction for individuals and HUF u/s.80CCF for investment up to Rs.20,000/- in 'long term infrastructure bonds'

• Benefit for payment to mediclaim u/s.80D also extended to payment made to 'Central Government Health Scheme'

• Simplified Saral-II for individual tax payer to be notified.

• Limit of compulsory tax-audit u/s.44AB enhanced from Rs40 Lakhs to Rs60 Lakhs in case of assessee having income from business and in case of assessee having income from profession, it is enhanced from Rs.10 Lakhs to Rs.15 Lakhs. This will be applicable in relation to financial year 2010-2011

• Minimum penalty for not submitting audit report before due date is enhanced from Rs.1 Lakhs to Rs.1.5 Lakhs

• Retrospetive from 1-4-2009 no disallowance u/s 40(i)(ia) will be made in relation to payment made subject to tax in previous year if after deduction of tax during the previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.

• Threshold limit of TDS has been proposed to be increased from 1-7-2010 In respect of following payments

  Sec	Nature of payment	Existing threshold	Proposed Threshold
  194B	Winning from Lottery & crossword puzzles	5,000	10,000
  194BB	Winnings from Horse Race	2,500	5,000
  194C	Payment to Contractors	20,000  [for single transaction]	30,000
  194C		50,000 [for aggregate transactions]	75,000
  194D	Insurance Commission	5,000	20,000
  194H	Commission or brokerage	2,500	5,000
  194I	Rent	1,20,000	1,80,000
  194J	Fess for professional or technical services	20,000	30,000

• Effective 1 July2010, the interest rate for delay in deduction or payment of withholding tax is revised from 1 % to 1.5% p.m. from the date on which tax is deducted till its payment. For the period from the date of obligation to deduct to the date of deduction of tax at source, the interest rate continues to beat 1 % p.m.

• The Tax Deductor or Tax Collector obliged to furnish relevant certificate to the Payee for taxes deducted at source for financial year 2010-11 and onwards.

• Certain exemption form Capital Gains granted to companies for conversion to LLP

• Rate of MAT is increase to 18% of Book Profits.   Tax credit shall be allowed to be carried forward and set off up to 10 Assessment years immediately succeeding the AY in which tax credit becomes allowable.

• The income of Approved Research Associations undertaking research in social science or statistical research are to be tax exempt

• The weighted deductions for scientific research and development increased as under: - For expenditure incurred by eligible company in the recognised in house research and development facility, the weighted deduction increased to 200 percent from 150 percent- For payments to the National Laboratory or a University or an Indian Institute of Technology or a Research Association or a specified person, the weighted deduction has been increased to 175 percent from 125 percent - For payments to Approved Research Associations, undertaking research in social science or statistical research, the weighted deduction is to be allowed at 125 percent